INDIA MALAYSIA RELATIONS

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Context: The Prime Minister of Malaysia's three-day visit to India represents a significant milestone in strengthening Malaysia-India relations. 

Malaysia ●Malaysia is made up of two distinct regions separated by the South China Sea: Peninsular Malaysia and East Malaysia. Peninsular Malaysia lies to the west of the South China Sea and shares borders with Thailand, Singapore, Vietnam, and Indonesia. East Malaysia, located on the island of Borneo, is bordered by Brunei, Indonesia, and the Philippines. ●About half of the population is ethnically Malay, while significant Chinese and Indian communities contribute to the country’s vibrant culture. ●The official language is Malaysian Malay, though English is widely spoken and serves as a second language. ●Islam is the official religion, but freedom of religion is granted to non-Muslims, reflecting the country’s inclusive nature. ●Malaysia’s economy is a blend of tradition and modernity. Historically driven by natural resources like rubber, tin, and palm oil, Malaysia has evolved into a newly industrialized market economy. Today, it’s known for its manufacturing sector, growing tourism industry, and significant role in global trade. ●It is one of the world’s 17 megadiverse countries, hosting 20% of the world’s animal species. The tropical climate supports diverse ecosystems, from rainforests to mangroves. ●Malaysia’s forests are home to a plethora of species, including the iconic Malayan tiger and Rafflesia, the world’s largest flower. ●The country has several UNESCO World Heritage Sites, such as Kinabalu National Park and Gunung Mulu National Park, known for their unique flora and fauna.

Details

• This visit is significant as it is Anwar Ibrahim's first official trip to India as Malaysia’s Prime Minister. The visit aims to further enhance the bilateral ties between the two countries, building on a relationship that has evolved over many years.
• During his visit, Prime Minister Anwar Ibrahim is expected to focus on several key areas:
  • • Bilateral Discussions with Prime Minister Modi: The discussions will likely cover a wide range of topics, including trade, investment, and regional security. This meeting aims to identify new areas for cooperation and address any challenges in the relationship.
    • Meeting with President Droupadi Murmu: This meeting will highlight the importance of diplomatic ties and enhance the ceremonial and symbolic aspects of the relationship.
    • Engagement with External Affairs Minister Dr S. Jaishankar: This interaction will focus on practical aspects of cooperation, including specific projects and initiatives that can benefit both nations.

Key Areas of Cooperation ●Trade: India and Malaysia have a strong trade relationship, with Malaysia being one of India’s key trading partners in Southeast Asia. Anwar Ibrahim’s visit may lead to new trade agreements or enhancements to existing ones. The Comprehensive Economic Cooperation Agreement (CECA) between India and Malaysia has facilitated increased trade. Anwar Ibrahim’s visit might focus on expanding this agreement to cover new sectors or address trade imbalances. ●Investment: Indian investments in Malaysian sectors such as infrastructure and technology have been significant. For example, Indian companies like L&T have been involved in Malaysian construction projects. New investment opportunities may be explored during the visit. ●Defence and Security: Both countries collaborate on defence matters, including maritime security and counter-terrorism. Strengthening this cooperation can contribute to regional stability. ●Cultural and Educational Exchanges: Expanding cultural and educational ties can enhance mutual understanding and promote people-to-people connections. Initiatives such as student exchange programs and cultural festivals can play a significant role in this.

India and Malaysia

• India and Malaysia share a rich and diverse relationship that stretches back centuries, blending historical connections with contemporary partnerships.
• Their bilateral ties cover a wide range of areas, from trade and investment to cultural exchanges and security cooperation.

Historical Connections ●India and Malaysia's relationship is rooted in ancient history. Early trade between Indian kingdoms and what is now Malaysia dates back to the 5th century. ●Indian influence is evident in Malaysia's historical kingdoms, where Hindu and Buddhist cultural elements shaped local traditions. ●Today, Malaysia continues to reflect its Indian heritage through its cuisine, language, and cultural practices.

Diplomatic Relations

• Official diplomatic relations between India and Malaysia began in 1957, when Malaysia gained independence. Since then, leaders from both countries have engaged in numerous visits to strengthen bilateral ties.
• A key milestone was the elevation of their relationship to an Enhanced Strategic Partnership in 2015. This partnership symbolizes a commitment to deeper cooperation across various sectors, aiming to address mutual challenges and leverage opportunities in a changing global landscape.

Key areas of cooperation in the Comprehensive Strategic Partnership 2015
Digital Investments	●Both countries will explore opportunities in the digital sector, including technology transfer and digital infrastructure development. ●India’s success in IT services and Malaysia’s advancement in the digital economy can lead to joint ventures in tech startups and cybersecurity.
Trade	●Expanding bilateral trade beyond current levels by addressing trade imbalances and exploring new markets. ●Malaysia is already a major trading partner for India, and enhanced cooperation could increase trade in sectors like agriculture and high-tech industries.
Construction	●Collaboration on infrastructure projects, including smart cities and transportation networks. ●Past collaborations, like the construction of airports in Hyderabad and Delhi by Malaysian companies, serve as a model for future projects.
Agriculture	●Joint efforts to improve agricultural practices, food security, and sustainability. ●Leveraging India’s agricultural technology and Malaysia’s expertise in palm oil production for mutual benefit.
Education	●Strengthening educational exchanges and research collaborations. ●Establishing academic chairs and research programs in fields like Ayurveda, as previously initiated by the MoU between the University Tunku Abdul Rahman and the Institute of Teaching and Research in Ayurveda.
Research and Innovation	●Promoting joint research initiatives in cutting-edge fields such as semiconductor technology and renewable energy. ●Malaysia’s position as a hub in semiconductor manufacturing complements India’s growing technology sector.
Military Collaboration	●Enhancing defence ties through joint operations and strategic cooperation. ●Collaborative efforts to safeguard maritime borders and counter security threats.

Economic Relations

• Malaysia is an important trade partner for India. In 2022-2023, bilateral trade between the two countries reached an impressive $19.89 billion. Of this, India exported goods worth about $7.15 billion to Malaysia and imported items worth $12.73 billion.
  • • This trade relationship highlights Malaysia's role as the 13th largest trading partner for India and shows India as one of Malaysia’s top trading partners in Southeast Asia.
• Key Export and Import Commodities
  • • Exports from India to Malaysia: India’s major exports to Malaysia include petroleum products ($1.40 billion), aluminium and its products ($0.78 billion), and buffalo meat ($0.53 billion) for the fiscal year 2022-23.
    • For the period from April to November 2023, significant exports comprised engineering goods ($1.23 billion), petroleum products ($1.03 billion), and organic chemicals ($371 million).
• Imports from Malaysia to India: India’s imports from Malaysia are dominated by vegetable oils ($3.60 billion), crude petroleum ($1.24 billion), and computer hardware ($0.64 billion) during FY23.
  • • For the period April-November 2023, the major imports included vegetable oils ($1.64 billion) and electrical machinery ($1.07 billion).
• India and Malaysia have recently initiated bilateral trade in their local currencies. This move aims to boost trade by reducing reliance on the US dollar and promoting economic cooperation.
  • • Such agreements, also made with countries like Japan and South Korea, are part of India’s broader strategy to strengthen its economic footprint in Asia.
• India is a major source of tourists for Malaysia, with 735,309 Indian visitors in 2019, reflecting a 22% increase from previous years. Conversely, over 332,000 Malaysians visited India, indicating a strong bilateral tourism exchange.
• Malaysia ranked 31st in terms of Foreign Direct Investment (FDI) in India, with an inflow of $1.18 billion from April 2000 to September 2023. Including investments routed through Mauritius, the figure is estimated to be around $7 billion.

Education Relations

• Education has been a vital component of India-Malaysia relations. Historically, many Malaysian students pursued higher education in Indian institutions, particularly in medicine.
  • • For Example, between the 1960s and 1970s, around 30,000 Malaysian students studied in India, with over 30% of Malaysia's doctors having been trained there.
• This trend continues today, with institutions like the Manipal Global Education Group establishing campuses in Malaysia to meet the educational needs of Malaysian students.

Security Cooperation

• Indian training programs for Malaysian security forces have been a long-standing practice, contributing to Malaysia’s defence capabilities.
• In response to growing regional security challenges, India and Malaysia have sought to enhance their military and security cooperation.
  • • This includes joint efforts in counter-terrorism and maritime security, reflecting their mutual interest in maintaining regional stability and security.
    • Exercise HARIMAU SHAKTI is an annual training event between the Indian and Malaysian Army which has been conducted since 2012.
      

The Palm Oil Trade Dispute ●In 2020, tensions arose between India and Malaysia over Malaysia’s comments on Kashmir and the Citizenship Amendment Act. ●India responded by imposing restrictions on Malaysian palm oil imports. This situation highlights how political disagreements can impact economic relations. ●However, the subsequent change in Malaysia's leadership and the signing of a significant rice import deal led to the lifting of these restrictions, demonstrating the resilience and adaptability of their economic ties.

Challenges in the India-Malaysia Economic Relationship

Trade Imbalances

• India and Malaysia experience a trade imbalance, with Malaysia often having a trade surplus due to its exports of palm oil and other commodities. In 2022, Malaysia's exports to India totalled $12.42 billion, while India's exports were $7.19 billion.
• This imbalance can strain relations and affect economic stability. For example, if India imports more from Malaysia, it can lead to a higher trade deficit, potentially affecting the economic dynamics and negotiation power of both countries.
• Diversifying trade portfolios to include more sectors and commodities can help balance this trade disparity. Increasing bilateral trade in high-value sectors like technology and renewable energy might address this issue.

Geopolitical Shifts

• The geopolitical challenges, especially tensions in the South China Sea and regional power dynamics, influence bilateral relations. Malaysia’s strategic position in the Indo-Pacific region means it must navigate relationships with major powers like China and the U.S..
• These geopolitical tensions can complicate trade and defence collaborations. For instance, Malaysia's relations with China might affect its trade policies with India, given China’s significant economic and political influence.
• Strengthening diplomatic dialogues and participating in joint regional forums can help mitigate the effects of these geopolitical shifts. Collaborative initiatives on maritime security can also stabilize relations.

Regulatory and Policy Differences

• Differences in regulatory frameworks and business environments can pose challenges.
• These differences can affect investor confidence and business interactions. Companies from both countries may face hurdles in navigating diverse regulatory landscapes, impacting bilateral investments and trade efficiency.
• Harmonizing regulations and simplifying business processes can enhance cooperation. Initiatives like bilateral agreements on trade and investment can streamline operations and attract more investments⁶.

Cultural and Social Issues

• Despite a significant Indian diaspora in Malaysia, cultural and social issues sometimes arise. Ensuring the integration and rights of the Indian community is crucial for maintaining positive relations.
• Cultural misunderstandings or social tensions can affect people-to-people ties and hinder bilateral interactions. Addressing these issues is vital for developing a harmonious relationship.
• Promoting cultural exchange programs and initiatives to support the Indian diaspora in Malaysia can enhance mutual understanding and cooperation.

Way Forward

Enhancing Economic Cooperation

• Diversification of Trade: To reduce dependency on specific commodities, both countries can explore trade in emerging sectors. For example, expanding trade in digital technologies, renewable energy, and healthcare can open new avenues for growth.
• Investment in Emerging Sectors: Investment in technology and renewable energy is a promising area. Malaysia’s planned investment in renewable energy in India exemplifies this trend.

Strengthening Strategic Partnerships

• Defence and Security Cooperation: Joint military exercises, training programs, and defence agreements can enhance regional stability. The Indo-Malaysia Defense Cooperation Meeting (MIDCOM) is an example of such collaboration.
• Maritime Security: Collaborating on maritime security in the Indo-Pacific can ensure safe navigation and bolster trade relations. Joint efforts in this area can also contribute to regional stability.

Cultural and Educational Exchanges

• Promoting Cultural Understanding: Increasing cultural exchanges through festivals, arts, and education programs can build a stronger foundation for bilateral relations.
  Educational Collaborations: Student exchange programs and academic partnerships can strengthen ties and develop long-term relationships. Initiatives like the Indian Technical and Economic Cooperation Program (ITEC) and the Malaysian Technical Cooperation Program (MTCP) highlight these efforts.

Policy Harmonization

• Regulatory Alignment: Aligning regulatory frameworks can ease business operations and encourage investment. Bilateral agreements can help in formalizing and strengthening cooperation.
• Bilateral Agreements: Expanding agreements in trade, investment, and technology can formalize cooperation and drive economic growth. The Comprehensive Economic Cooperation Agreement (CECA) between Malaysia and India is a step in this direction.

Utilizing Regional Platforms

• ASEAN and Beyond: Utilizing regional platforms like ASEAN to address common challenges and promote integration can enhance bilateral relations. Both countries can collaborate on regional initiatives to drive economic growth.
• Global South Cooperation: Working within the Global South framework can amplify their voices and address shared concerns on the global stage.

Conclusion

• Prime Minister Anwar Ibrahim’s visit to India is an important opportunity to deepen the bilateral relationship between Malaysia and India. By focusing on key areas such as trade, investment, defence, and cultural exchanges, the visit aims to build on the existing strategic partnership and explore new opportunities for collaboration. This engagement not only highlights the strong historical and socio-cultural connections but also sets the stage for a future of enhanced cooperation and mutual growth.

Source:

NEWS ON AIR

Ministry of External Affairs

India Briefing

India Brand Equity Foundation

The Star

Wikipedia

PRACTICE QUESTION Q. Which of the following countries does not have a coastline along the Strait of Malacca? A) Malaysia B) Singapore C) Thailand D) Indonesia   Answer: C